Antoinette Slabbert
2 minute read
26 Mar 2014
6:00 am

Cell giants fire opening shots

Antoinette Slabbert

Vodacom and MTN yesterday have asked the South Gauteng High Court to suspend interconnection rates due to take effect on April 1, should it decide not to set aside and review the determination of these rates in a final order.

Picture: Supplied.

This determination will see the rates that cellphone providers charge each other to carry each other’s clients’ calls drop from 40c to 20c per minute for Vodacom and MTN and rise to 42c for the smaller CellC and Telkom Mobile.

MTN said yesterday that the current regulations determining tariffs that were implemented in 2010 and have already been extended by one month, may be extended further.

If the review fails later, a calculation could be made and reimbursements be done to place all parties in the same position they would have been if the new tariffs took effect on April 1.

MTN also indicated yesterday that should their urgent application fail, they would proceed with their review application in the normal course.

Vodacom argued that Icasa cannot implement the 2014 determination, because it did not follow due process to come to the determination. It is a mere thumb suck, Vodacom argued.

It said the last determination properly arrived at was the 2010 regulations. That could be extended by the court or Icasa itself, but actually it can also go without regulation for the time being.

Vodacom argued that Icasa could only lawfully impose pro-competition measures like the differentiated rates if it made a finding that there was ineffective competition in the market.

To come to that conclusion it had to define the wholesale or retail market. Icasa defined the markets for interconnection as different markets where each service provider is 100% dominant with no competition.

The only way it could then arrive at the conclusion that there is ineffective competition, is to find that pricing is inefficient because it has not driven down to cost through competition.

In order to determine that, Icasa would have to know what cost is, but it conceded that their determination that the true cost stands as 10c is indefensible. This renders the whole argument flawed, Vodacom argued.

It further said that the price paths set out by Icasa are “bizarre”. While the stated purpose was to end at the same cost-reflective price level of 10c, the subsidy required from the bigger players for the smaller players increase from 120% in 2014 to 180% next year and 300% in 2016.

Vodacom agreed with MTN that it is actually entitled to final relief to set aside the determination after Icasa conceded that it could not defend its finding that the real cost of interconnection is 10c per minute.

It said there is no sense in coming back to court at a later date to argue the same case on the same facts that Icasa has already admitted.